Saturday, October 22, 2011

Ex-Dow Scientist Admits to Economic Espionage, U.S. Says

An ex-Dow AgroSciences LLC researcher pleaded guilty to economic espionage in connection with the theft of trade secrets from his former employer to benefit a Chinese university, the U.S. Justice Department said.

Kexue Huang, 48, also admitted to stealing trade secrets from the Minneapolis-based grain distributor Cargill Inc., the U.S. said in a press statement today.

“Mr. Huang used his insider status at two of America’s largest agricultural companies to steal valuable trade secrets for use in his native China,” Assistant U.S. Attorney General Lanny Breuer said in the statement.

Huang entered guilty pleas today in two separate criminal cases before U.S. District Judge William T. Lawrence in Indianapolis. Financial losses from his conduct exceed $7 million, the U.S. said.

His attorney, James Edgar of Indianapolis, didn’t immediately reply to voice-mail and e-mail messages seeking comment on the pleas.

Huang worked for the Indianapolis-based unit of Midland, Michigan-based Dow Chemical Co., where he researched the development of organically derived pesticides, from 2003 to 2008. He then went to work for Cargill as a biotechnologist.

Two People

While at Dow, he shared confidential information with at least two people, one of whom conducted research first at the Hunan Normal University in China and later in Dresden, Germany, according to a plea agreement that didn’t name the people.

In stealing, transferring and using Dow trade secrets, Huang “intended to benefit” Hunan Normal University and the National Science Foundation of China, according to the plea agreement. Each of those institutions is controlled by the Chinese government.

A U.S. grand jury in Indianapolis indicted Huang on 17 counts in June 2010. A separate federal grand jury in Minnesota returned a single-count indictment accusing him of stealing a trade secret related to food processing from Cargill in November. That case was transferred to Indianapolis, where it was unsealed today.

Huang also admitted to sharing information taken from Cargill with a Hunan Normal University student.

“Cargill is pleased the case has been resolved,” a spokeswoman for the company, Lori Fligge, said in an e-mailed statement.

Ten Years

Garry Hamlin, a Dow spokesman, said it can take more than 10 years for the technology Huang tried to obtain to reach the market.

“Dow AgroSciences has analytical technology and processes in place to identify third-party product produced with proprietary technology stolen by Mr. Huang,” Hamlin said in an e-mailed statement. Dow is strengthening security measures to protect its technology and seeking to ensure that counterfeit products derived from it never find a market, said Hamlin.

The crime of economic espionage is punishable by as long as 15 years in prison, and trade-secret theft carries a maximum term of 10 years, the Justice Department said.

“Today’s plea underscores the continuing threat posed by the theft of business secrets for the benefit of China and other nations,” Lisa Monaco, assistant U.S. attorney general for national security, said in the Justice Department’s statement.

The Chinese embassy’s press attache in Washington also didn’t immediately reply to an e-mailed request for comment.

The cases are U.S. v. Huang, 10cr102 and 11cr163, U.S. District Court, Southern District of Indiana (Indianapolis).